Why Will Economic Growth Be Slower in 2060 Across the Globe?

The global economy is one thing that may not be getting better with time.

Aging populations, climate change, decelerating growth in emerging economies and rising inequality threaten to drag down global growth in the next five decades, according to a recent report from the Organization for Economic Cooperation and Development. It projects that the world economy will expand at an annual average 2.4% in 2050 to 2060, notably slower than the 3.6% estimated between 2010 and 2020.

Climate change will be a critical factor weighing on global growth, unless steps are taken to reduce carbon dioxide emissions, the OECD report said. By 2060, climate change could curtail South and Southeast Asia’s gross domestic product by nearly 6%, and by 1.5% globally.

Heightened income inequality inside advanced economies will prove a challenge to global growth as well, the OECD said. If policies remain unchanged, the average OECD country will face a drastic increase in pretax earnings inequality–by 30%–in 2060, which could hinder growth if such imbalances limit economic opportunities for low-income individuals, the OECD said.

Meanwhile, even as inequality grows inside developed nations, the income gap between advanced and emerging economies is expected to shrink. That will likely lead to less economic migration, the OECD said, adding to pressures on growth already caused by aging populations.

Such shifts mean the global economy will have to pin its hopes on innovation and investment in skills to drive growth 50 years from now, the OECD said.

About The Numbers

The Wall Street Journal examines numbers in the news, business and politics. Some numbers are flat-out wrong or biased, while others are valid and help us make informed decisions. We tell the stories behind the stats in occasional updates on this blog.